Within the context of a practical framework for safeguarding financial stability -
entailing both prevention and resolution - this paper discusses the practical
boundaries and challenges of assessing financial stability. The paper characterises
the financial stability challenge, discusses concepts and definitions essential for
safeguarding stability, and puts forward a practical process (but not a blueprint)
for assessments. The paper proposes guidelines for disciplining an assessment
process, examines measurement and modelling ambiguities, and identifies areas where
significant further progress is necessary.
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